Aviva 2007 Annual Report Download - page 100
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Please find page 100 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Aviva plc
Annual Report and
Accounts 2007
96
Governance
Directors’ remuneration report continued
The first bar chart shows the breakdown of the package into its main constituent elements. The second bar chart shows
a breakdown which highlights the proportion in the package of fixed cash, variable cash and shares. For the purposes of
the second table, fixed cash includes basic salary and the discretionary Aviva Capital Accumulation Plan (ACAP) payment.
Variable cash is the one-third of bonus paid in cash annually. The share element includes both the two-thirds of bonus
deferred into shares and the LTIP.
– “Target” performance means a target bonus outcome (75% of basic salary) and minimum LTIP vesting on both the
TSR and ROCE elements (30% of an LTIP award).
– “Stretch” performance means a stretch bonus outcome (150% of basic salary) and full LTIP vesting (100% of an
LTIP award).
The breakdown does not include any share price growth, the dividends on the (ABP) deferred shares or other benefits
(cash car allowance, value of Private Medical Insurance (PMI) and all-employee share ownership plans).
Remuneration policy in practice
Policy How delivered
Total remuneration
– Total remuneration package levels are informed by relevant pay data, – Basic salary
in particular the lower quartile to median range of the FTSE 30 – Annual Bonus Plan
and the median to upper quartile range of the FTSE 50. – LTIP
– These reference points are chosen to reflect Aviva’s market capitalisation – Long-term savings
and comparability to other large, sophisticated multi-national companies – Pension
and the positioning that is appropriate to Aviva in those different – Benefits
comparator groups. – All-employee share schemes.
Basic salary
– Benchmarked as for total remuneration but with positioning and progression – Monthly in cash
taking account of individual and business performance and the levels of increase – Reviewed annually in February,
provided for the broader UK employee population (basic salaries of the UK staff with changes taking effect
increased by 3.5% on average in 2007). from 1 April.
– The Committee takes seriously institutional investors’ concerns on the
“ratcheting” of basic salaries and does not unquestionably accept a particular market
position or salary.
Discretionary Annual Bonus Plan (ABP)
– The ABP is intended to motivate directors to achieve the annual business plan, – Annually, one-third is paid
based on a series of key financial, employee and customer performance in cash and two-thirds in
indicators (KPIs), which make up 70% of the bonus opportunity, and deferred shares.
personal objectives (30%).
– 75% of basic salary is payable for “on target” performance and up to 150%
is for “stretch” performance.
– Deferred shares vest on the third anniversary of the date of grant, subject to the
recipient remaining in service. On resignation during the three year deferral
period all or part of the grant is forfeited (100% in year of grant,
50% in following year and 25% in year after that).
Long Term Incentive Plan (LTIP)
– The LTIP is intended to promote achievement of the Company’s longer-term – Annual awards in restricted
objectives, to aid the retention of key personnel and to align executive shares that vest, subject to
interests to those of shareholders. performance conditions being
– The Group Chief Executive is eligible to receive an annual award of shares met at the end of a three year
equal to 175% of basic salary. Other executive directors are eligible to performance period.
receive an annual award of shares equal to 150% of basic salary. – Awards that do not vest lapse.
– Awards to other senior staff vary based on performance over time and potential
and are normally up to 150% of basic salary.
– No award may exceed 200% of basic salary.
Long term savings
– The ACAP is a long-term savings vehicle which aids retention whilst recognising – Discretionary payments into a
a need for flexibility in long-term wealth planning. trust where they are held for a
– Company contributions are discretionary and vary year-on-year, but would not minimum of five years.
normally exceed 50% of basic salary. Contributions for the executive directors
are shown in the table on page 97.
– No one who participates in the ACAP is accruing benefits in the Aviva Staff Pension
Scheme. A resignation or departure for breach of contract generally results in
forfeiture of contribution for the relevant year.